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Discretionary Allotments

The discretionary allotment component is used to enter or update a recurring deduction. The employee and the Agency authorize the discretionary allotment. The head of the Agency may allow discretionary allotments for any purpose deemed appropriate. They are commonly used for paying employees’ monthly bills to a designated payee, either an individual or company. Follow your Agency’s policy.

Discretionary allotments are monthly payments divided into two deductions which are effective on the first payday of the month. If the allotment is established or changed in the middle of the month, it will not take effect until the beginning of the following month. For the months in which there are three pay periods, deductions are not withheld for the third payday.

This example explains how to establish a Discretionary Allotment from data submitted on
‎SF 1199A and a copy of a voided check or deposit slip to verify bank information included on the SF 1199A.

Before beginning, the following information is needed:

  • Type of Account
  • Account Number
  • Total Amount of the Allotment
  • Bank Routing Number

Discretionary allotment payments are made whether as a full payment, half of the payment, or nothing is paid. The order of precedence for payment of monthly allotments is based on the date established.

If an employee is on extended non-pay status, deductions cannot be made. If an employee is in non-pay status for a partial pay period, half of the monthly payment is deducted, if possible. If half cannot be deducted, no deduction is made.

Merger or Takeover of a Financial Organization for Discretionary Allotments

When a merger or takeover of a financial organization occurs, the Department of the Treasury notifies NFC of the change in the financial organization’s routing number. Treasury also provides NFC with the account number(s) of those employees payrolled by NFC who have accounts with the financial organization.

Treasury electronically transmits these changes to NFC on a daily basis. These changes are edited and processed to update or modify the financial organization’s routing number and/or account number in the Payroll/Personnel database for those employees who are affected by a merger or takeover.

If the routing number and/or account number that is received from the Department of the Treasury does not agree with the routing number and/or accounting number currently on the Payroll/Personnel database for an employee, NFC will mail the Report PINE5801, Notification of Change (NOC) Suspense Report, to the employee’s personnel office. The personnel office should take the appropriate action to correct this report.

If the employee elects to change to another financial organization, the employee must submit a new SF 1100A, which must be completed by both the employee and the new designated financial organization.

Insufficient Fund for Discretionary Allotments

If an employee is on leave without pay (LWOP) for part of a pay period but not enough funds were deducted, half of the monthly payment is made, if possible; otherwise, nothing is paid.

The order of precedence for paying monthly allotments is the same order in which they were established.

Changes in Discretionary Allotments

Agency personnel offices should be notified of all changes regarding discretionary allotments. Verify the correct allotment number before making a change to either the amount or payee information if the employee has multiple allotments; otherwise, erroneous data could affect another allotment.

Cancellation of Discretionary Allotments

Employees may request the cancellation of an allotment. Once an allotment is canceled, the number can be used again for another allotment. Discretionary allotments are automatically canceled once an employee separates. Any outstanding balances are refunded.

If an employee transfers to another Department, all allotments are canceled. If the gaining Department allows for discretionary allotments, the allotment must be entered as a new allotment.

If an employee transfers to another Agency serviced by NFC within their original Department, the discretionary allotment deductions remain in effect. However, if the position is ineligible for discretionary allotments, the gaining Agency must process a cancellation for all discretionary allotments.

The following are guidelines for processing discretionary allotments:

  • Number the allotments sequentially beginning with number 01. Before entering an allotment, ensure that the allotment is not already in effect.
  • The allotment cannot be processed if the effective pay period is for payments that will be made on the second or third payday of the month. If the effective pay period is not correct, delete the document from suspense and re-enter the correct pay period.

Non-Receipt of Payment for Discretionary Allotments

Discretionary allotment payments can either be made (1) electronically to a financial organization or (2) by a check issued directly to the payee.

DD/EFT discretionary allotment payments are made electronically from the Department of the Treasury, through the Federal Reserve System, to the payee. For non-receipt of DD/EFT payments, Agency personnel offices must contact the payroll office.

For non-receipt of a check, the payee should contact the responsible employee’s Agency personnel office regarding replacement of the missing check. The Agency must then follow the Recertification procedures.

Separations and Transfers Relating to Discretionary Allotments

Discretionary allotments are automatically canceled once an employee separates. PPS refunds any outstanding balances.

If an employee transfers to another Department, all allotments are canceled. If the gaining Department allows for discretionary allotments, the allotment must be entered as a new allotment.

If an employee transfers to another Agency serviced by NFC within the Department, the discretionary allotment deductions remain in effect. However, if the position is ineligible for discretionary allotments, the gaining Agency must process a cancellation for all allotments.